CDP SUPPLY CHAIN:

CHANGING THE CHAIN

Making environmental action in procurement the new normal
Written on behalf of 125 organizations representing US$3.6 trillion of procurement spend

CDP supply chain report 2019/20

 TABLE OF CONTENTS

04 Foreword: Microsoft

05 Executive summary

07 About this report

08 Buyers taking action

10 Acting on climate change

12 Protecting forests

14 Water stewardship in the supply chain

15 Regional overview

16 Acknowledgements

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© 2019 CDP. All rights reserved.

2
CDP SUPPLY CHAIN MEMBER
ORGANIZATIONS

Premium members Standard members

{{ Microsoft Corporation { Accenture {{ Intel Corporation
{ Stanley Black & Decker, Inc. { Acer Inc. { International Flavours and Fra-
{{ Walmart Inc. { Águas Andinas SA grances Inc.
{{ Ajinomoto Co.Inc. { Itaú Unibanco Holding S.A.
{ Amdocs Ltd {{ Jaguar Land Rover Ltd
Lead members {{ Anheuser Busch InBev {{ Johnson & Johnson
{{{ Arcos Dorados {{{ KAO Corporation
{{ Alphabet, Inc
{ ARKEMA { Klabin S/A
{ Bank of America
{ AT&T Inc. { KPMG UK
{ Barclays
{ Avianca Holdings S.A. { Los Angeles Department of Water
{{ Braskem S/A
{ Banco Bradesco S/A and Power
{{ Dell Technologies
{{ Banco do Brasil S/A { Mastercard Incorporated
{{ Grupo Bimbo
{ Banco Santander {{ McDonald’s Corporation
{{ Imperial Brands
{{ BMW AG { MetLife, Inc.
{{ JT International SA
{ Bridgestone Corporation { Metro AG
{{ Juniper Networks, Inc. { Bristol-Myers Squibb { Ministry of the Environment,
{ Kellogg Company { British American Tobacco Government of Japan
{ Koninklijke Philips NV { BT Group {{ Mitsubishi Motors Corporation
{{{ L’Oréal { Caesars Entertainment {{{ MRV Engenharia e Participações
{ NRG Energy Inc {{ Caixa Econômica Federal { National Grid PLC
{{{ Philip Morris International {{ California Department of General { Naturgy Energy Group SA
{ SABIC Services (DGS) { NEC Corporation
{ Signify NV { CANPACK Group {{ Nissan Motor Co., Ltd.
{ Target Corporation { Cellnex Telecom SA {{ Nokia Group
{ The LEGO Group { Chunghwa Telecom { PepsiCo, Inc.
{{ Virgin Money Holdings { Cisco Systems, Inc. { Pirelli
{ Wells Fargo & Company { CNH Industrial NV { Prysmian SpA
{{ Colgate Palmolive Company {{ Restaurant Brands International
{ Croda International { Royal Bank of Canada
{ CVS Health { S Group
{ Daimler AG {{ S.C. Johnson & Son, Inc.
{ Deutsche Telekom AG { Samsung Electronics
{{ Diageo Plc
{ Sekisui Chemical Co., Ltd
{ Eaton Corporation
{ Sky plc
{ Ecorodovias Infraestrutura e
{ Snam S.p.A
Logística S.A
{ SSE
{{ Endesa
{ Swisscom
{ Fiat Chrysler Automobiles NV
{{{ Symrise AG
{{{ FIRMENICH SA
{ TD Bank Group
{{ Ford Motor Company
{ Tesco
{{ Fujitsu Limited
{{ General Motors Company {{ The Coca-Cola Company

{{ Givaudan SA {{ Toyota Motor Corporation

{ Grupo CCR { U.S. General Services
Administration (GSA)
{ Heineken NV
{ Ultragaz S/A
{ Hewlett Packard Enterprise
Company {{ Unilever plc
{{ Honda Motor Co., Ltd. { Visa, Inc.
{{ Honda Europe { VMware, Inc
{ Honda North America, Inc. { Vodafone Group
{ Climate change member {{ HP Inc {{ Volkswagen AG
{ Forests member { HTC Corporation { Walmart – Brasil
{ Water member { Husqvarna AB {{ WalMart de Mexico
3
 FOREWORD FROM LUCAS JOPPA
CHIEF ENVIRONMENTAL OFFICER
FOR MICROSOFT CORPORATION
The world’s leading environmental scientists have spoken, and
the message is clear: the best time to act on climate change was
yesterday, so we better start today. The task is much bigger, and time
is way shorter than previously thought. We must take immediate
action to ensure a sustainable supply of clean food, water, and air to
a human population rapidly growing to 10 billion, all while stemming
a globally catastrophic loss of biodiversity and averting the worst
economic impacts of a changing climate.
Given the enormity of this task, it will be critical As we continue to accelerate our efforts to enable
that every individual and organization step up their a low-carbon transition and push the boundaries
ambition. There is a clear case for the private sector of corporate sustainability even further, we are also
to play, and equally clear expectation for business looking at our sphere of influence in our supply
to rise to the challenge. Investors are now looking chain. To ensure our influence has the largest
at environmental data when choosing investments, impact, we sponsored the Committee on Supplier
employees are making career decisions based Ratings (COSR) to convene a multi-stakeholder
We have aligned our on the sustainability record of employers and group focused strategic sustainable procurement.
consumers are examining environmental labels Our strategy was, rather than create our own
supplier spend with when shopping. approach, to promote credible third-party ratings
the trillions of investor within our supplier engagements. The committee
dollars who also While there’s much more to be done, the good screened enterprise-level research providers and
leverage CDP data. news is that companies have been acting to reduce methodologies to determine which assessments
emissions within their operations and improving would be most appropriate for use in evaluating
This alignment of the energy efficiency of their products for years. supply chains. The COSR initiative was formalized
market signals drives These investments were not only the right thing to and adopted by the NGO Sustainable Purchasing
our suppliers to focus do, but also good for business – from renewable Leadership Council, who used the research to publish
on disclosing their GHG energy that provides price certainty to energy-smart a research and qualification tool, a resource for use
building solutions that cut energy bills and carbon by procurement professionals globally. In FY19, we
emissions and setting emissions to delivering beautiful, powerful and required our top suppliers to disclose their emissions
emission reduction efficient devices customers want to use. and set their targets through the CDP supply chain
targets in line with program, which was highly rated by COSR.
climate science. No single company, or even the private sector,
acting alone can solve this challenge. But as a The CDP supply chain program gathers information
global technology company, we at Microsoft believe from companies regarding emissions; climate-
we are well-positioned to enable and accelerate the related risks and opportunities; and mitigation with
transition, both through sharing our operational customers, suppliers, and other partners.  In FY18,
best practices to encourage others to act and by our top suppliers reduced their collective footprint by
developing and deploying cutting-edge technology 17 million metric tons of carbon dioxide equivalents
to empower sustainable digital transformations. (CO2e) and saved a total of $986.5 million. In FY20,
we almost tripled the number of suppliers in the CDP
In the past year, we’ve accelerated on our path to Supply Chain program, while providing capacity
powering our global operations with 100 percent building also in partnership with the CDP to ensure
renewable energy; taken steps to improve water our emissions reductions are achieved. 
efficiency across our operations; set a science-
based target in-line with a 1.5 degree scenario; or By working with COSR and the CDP, our approach
nearly doubling our internal carbon price to $15 per to sustainability has reduced supplier survey
metric ton. We work with our customers to facilitate fatigue and empowered procurement organizations
their own initiatives as well, from implementing their globally of any size. But more strategically, we
own carbon tax to making it easier to buy renewable have aligned our supplier spend with the trillions of
energy as a smaller buyer. We’ve established a $50M, investor dollars who also leverage CDP data. This
five-year program called AI for Earth to find, fund alignment of market signals drives our suppliers to
and facilitate new data science and AI approaches focus on disclosing their GHG emissions and setting
to sustainability challenges that has now supported emission reduction targets in line with climate
nearly 500 grants in more than 70 countries. science.

The world needs more companies to do this, engaging their suppliers

to accelerate environmental action. The stakes couldn’t be higher.
Failure to act would spell environmental disaster in the coming
years. But if we get it right, the prize will be a sustainable future
with a thriving economy, where both people and planet can prosper.
Lucas Joppa, Chief Environmental Officer, Microsoft Corporation
4
 EXECUTIVE SUMMARY

125
For most companies, the majority of their
environmental impacts and exposures are to
be found in their supply chains. For example,
companies’ supply chains produce on average
Awareness of deforestation risk among suppliers
is considerably less advanced compared with
climate change. Relatively few respondents report
undertaking a deforestation risk assessment.

members more than five times the emissions from their

direct operations. While reducing impacts beyond
a company’s direct control poses challenges, it also
Despite 71% CDP supply chain members
committing to eliminate deforestation and/or
conversion, only 27% of suppliers reported setting
representing provides opportunities to work with suppliers to policies with similar commitments.
multiply positive environmental impacts.

US$3.6
In addition, the focus to date on deforestation
This report explores which environmental actions risk in the food and packaging sectors overlooks
buyers should consider integrating into purchasing exposures in other sectors, such as automotives

trillion
processes when looking to reduce risk, drive
environmental action and meet public commitments.
It is based on information requested by 125
in procurement spend large corporate buyers with a collective annual
procurement spend of US$3.6 trillion. Almost
and chemicals. Suppliers report US$15.8 billion
at risk linked to deforestation, mainly from
reputational issues.
Reported exposures to water issues are even
higher, at US$78 billion at risk from water security.

95%
of CDP Supply Chain
members have or will have
integrated CDP data into
their supplier relationship
management processes
within the next two years
7,000 suppliers disclosed in 2019, compared with
5,600 in 2018.
These suppliers reported emissions of 7,976 million
metric tons of carbon dioxide equivalent (MtCO 2e)
– and US$906 billion of potential financial risk
linked to climate change. Encouragingly, they also
reported a total of 563 MtCO 2e in annual emission
savings this year. However, there is a long way
to go: only 29% reported absolute decreases in
emissions. Buyers are recognising this and are
driving suppliers to take more action.
For buyers, this raises the prospects of disruption
to the delivery of goods and services, increased
costs and reputational damage. CDP supply
chain members are encouraging suppliers to
reduce these risks by undertaking water-related
risk assessments, introducing public policies and
setting targets and goals.
To drive more action, buyers are starting to
integrate environmental data into the way they
manage suppliers on a day-to-day basis. We
surveyed the 125 CDP supply chain members,

US$1
finding that 65% of responding members report
One example is in purchasing renewable energy, using environmental metrics, including CDP
which offers enormous potential for reducing data, in their supplier relationship management

trillion
of financial impact reported
from environmental risks
emissions. When surveyed, more than two-thirds
(70%) of responding supply chain members
reported they are now actively encouraging
suppliers to do so. Were suppliers to increase
their proportion of the electricity they source from
processes, with a further 30% saying they plan to
do so within the next two years.
What is clear is that the environment is no longer
an add-on when it comes to purchasing. Almost

1gigaton
renewables by 20 percentage points, thereby all (95%) members said suppliers showing
increasing the average from 11% at present to 31%, environmental leadership are more competitive,
they could reduce emissions by a billion metric with only 5% stating that in their experience such
tons of CO 2e. suppliers are more costly. What this means for
suppliers is that those who are taking action are
meeting buyer expectations, whereas those who
aren’t may miss out on opportunities in the future.
of emissions could
potentially be saved if
suppliers increase their The potential of companies to drive emissions
renewables purchasing reductions at a global scale by engaging their supply
by 20 percentage points chains is immense -- and substantially unexploited.
It is essential to scale up corporate action to meet
global climate change targets, to address deforestation
and to ensure water security for all. Meanwhile, a
growing number of leading multinational companies
are integrating environmental performance into their
procurement processes – rewarding suppliers that
also prioritize environmental protection.
Sonya Bhonsle, Global Head of Supply Chains, CDP

5
6
ABOUT THIS REPORT
This report uses CDP data to better understand
how large purchasing organizations and their
suppliers are working to address impacts on and
risks from climate change, deforestation, and
water security.
CDP brings together 125 global corporations
and public sector organizations, with US$3.6
trillion in annual procurement spend, that request
their suppliers report to them through CDP’s
questionnaires regarding current and anticipated
environmental risks and opportunities.
Members sent 13,111 suppliers standardized
questionnaires on climate change, forests and/
or water security. Simplified versions were sent
to organizations with an annual turnover of less
than US$250 million or €250 million, and to larger
organizations disclosing for the first time.
This year, 53% of suppliers (6,958) responded.
This compares with 51% of 11,000 suppliers
approached last year.
Most respondents (6,891) provided information on
climate change. A smaller number of companies
were asked to respond on forests and water
Growth in CDP supply chain disclosures, 2008-2019
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
0 5,000
Total suppliers who disclosed to CDP
issues, as these are more recent additions to
CDP’s questionnaires and are of less relevance for
companies operating in some sectors. The forests
information requests were sent to 536 companies,
with 62% (334) companies responding. Regarding
water issues, 3,746 companies were invited
to respond, with 53% (1,975) completing a
questionnaire.
We also conducted a separate survey of supply
chain members, with over 35% (44) responding
to questions on how they integrate environmental
issues into their purchasing processes and
strategies.
The analysis in this report is based on data from the
companies that completed CDP questionnaires at
the request of their customers (CDP supply chain
members). It does not include those companies
that responded through CDP’s platform only to
their investors. Responses have been quality
assured and a small number of outlier data points
have been excluded to avoid reporting misleading
statistics. Where the report refers to % analysis,
the % is of suppliers or members who responded
to our request for information rather than the total
number asked.
10,000 15,000
Total suppliers asked to respond
7
 BUYERS TAKING ACTION
CDP’s supply chain members continue to innovate
to bridge the gap from traditional procurement to
sustainability best practice.
Nearly all (95%) of responding CDP supply chain
members said suppliers showing environmental
leadership are more competitive over the long
term, with only 5% stating that in their experience
those suppliers are more costly.
Engaging with a company’s supply chain is a
crucial component of a holistic environmental
strategy. We know from data reported to CDP that
the emissions in a company’s supply chain are
usually far greater than its operational emissions
(5.5 times higher on average); the same is true
for the associated impacts and risks regarding
deforestation and water security.
Sustainable sourcing and supply chain
transparency are increasingly being recognized
not only as an important part of a company’s
environmental strategy, but also as a fundamental
part of a sound overall business strategy. This
year, we surveyed CDP supply chain members
to better understand how they manage their
relationships with their suppliers. The survey
found that 95% of responding members believe
suppliers showing environmental leadership are
better value companies to partner with long-term,
with only 5% stating that in their experience those
suppliers are more costly.
To drive more action throughout their supply chains,
companies are starting to integrate environmental
Integrating supplier data into procurement processes
80%
70%
60%
50%
40%
30%
20%
10%
0%
Contracting Supplier Balanced
and tendering appraisals Scorecard/
other similar
appraisals
8
data into the way they manage suppliers on a day-
to-day basis. This year, 65% of responding members
report using environmental metrics, including CDP
data, in their supplier relationship management
processes, with a further 30% saying they plan to
reach that point in the next two years. By putting
environmental data at the heart of procurement
practices, companies are ensuring that sustainable
purchasing becomes business as usual.
To achieve this, CDP supply chain members
integrate environmental data into a combination
of procurement tools and processes. The
most popular approach, practiced by 75% of
respondents, is to include environmental metrics
alongside cost and quality in supplier appraisals,
whether written or face-to-face. Other members
have set clear expectations by including specific
language around environmental performance in
their contracting and tendering documents. In
52% of cases, buyer training and objectives around
sustainability were highlighted as a core part
of integrating data into the supplier relationship
management process. Applying CDP data and
environmental weightings to a variety of pre-
existing procurement mechanisms allows these
companies to move further towards a wholly
sustainable way of sourcing.
The innovation displayed by CDP supply
chain members is extending the reach of their
environmental leadership. By integrating data into
decision-making, training buyers and incentivising
suppliers, these leaders are evolving to future-
proof their supply chains and reduce their impact.
Supplier Buyer training or Supplier
Awards buyer objective selection or
setting deselection
 By using the CDP platform,
Signify is connecting with
strategic suppliers on climate
change and carbon emissions.
We have set a target to have 200
strategic suppliers report on
emissions reduction activities
by 2020 in order to decrease
environmental impact in our
supply chain. This year 160
of our suppliers reported carbon emissions reduction
activities, including purchasing renewable electricity. Signify
has committed to source 100% renewable electricity by
2020 as a member of the RE100 initiative. We want to see
our suppliers matching our ambitions, setting renewable
electricity targets, and reporting progress towards
achieving them year on year.
Luc Broussaud, Chief Procurement Officer, Signify
Here at BT we take our
environmental commitment
very seriously and we have a
target to be a net-zero carbon
emissions (Scopes 1 and 2)
business by 2045. We also work
very closely with our suppliers to
reduce the emissions associated
with our supply chain – they
represent 68% of BT’s total end-
to-end carbon emissions and we have a target to reduce
those emissions by 29% by 2030. To achieve this, building
environmental action into our procurement process is key.
BT collects data from suppliers through CDP and our on-
boarding process ensures our environmental expectations
are communicated early.
Cyril Pourrat, Chief Procurement Officer, BT
In order to meet our Science
Based Target commitment, we
aim to have our key suppliers
– covering at least 80% of our
procurement spend – disclosing
their climate impacts to us
through CDP by 2020. To meet
this goal, Supplier Relationship
Managers take every opportunity
to communicate our bold
commitment and the value of disclosure to suppliers.
Robert Blackburn, SVP Global Supply Management,
Stanley Black and Decker
At Firmenich, sustainability is
at the core of everything we
do. We strive to minimize our
environmental impact and
future-proof our supply chain,
continuously challenging
ourselves and our partners
to do better. The CDP supply
chain program is an excellent
example, where we encourage key suppliers to disclose
their environmental impact and inspire on-going
improvement. By driving environmental sustainability in
our supply chain, Firmenich reduced its emissions from
raw materials purchased in absolute terms, even as we
grew in production and size, thereby decoupling emissions
and growth. Firmenich works with suppliers that share
our environmental ambitions -- who take action to reduce
emissions, increase water security, and ultimately commit
to zero deforestation -- because we know that all this will
secure both a healthy business of tomorrow and a healthy
planet. We recognize that we must do well to do good and
do good to do well.
Boet Brinkgreve, Chief Supply Chain Officer, Firmenich
Accenture has the purchasing
power to drive positive change
on a global scale, creating more
sustainable supply chains.
It also allows us to advance
our key priorities, including
environmental action, respect
for human rights, inclusion,
diversity and social innovation.
Accenture’s Procurement Plus
organization, which I lead, is a key business partner on this
journey. For example, Accenture has committed to using
100% renewable energy across our global portfolio by 2023.
We will be encouraging similar ambition from our value
chain, and ideally reporting progress through established
platforms such as CDP supply chain. It also means our
partnerships with suppliers will move beyond analysing
and integrating emissions results into our processes to
forging even greater engagement and collaboration that
will drive uptake of this agenda at scale. We will actively
seek partnerships and suppliers that are even more closely
aligned to our corporate values so that, together, we will
improve the way the world works and lives.
Kai Nowosel, Chief Procurement Officer, Accenture
9
 RESPONDING TO CLIMATE CHANGE

6,892
A rising imperative
With atmospheric concentrations of greenhouse
gases continuing to climb, and the impacts of
supplier responses to extreme weather becoming increasingly evident,
member requests for public concern about the growing climate
climate disclosure, up by emergency has undergone a step change in 2019.
To limit climate change to 1.5 degrees Celsius we
24% from 2018
need to halve global emissions by 2030 and reach
members made requests to 13,065 suppliers,
with 6,892 responses received from businesses
headquartered in 98 different countries. This is a
24% increase on the 5,545 responses received in
2018.
These disclosures illuminate the scale of the risk
posed by climate change. Suppliers reported

US$906
net zero by mid-centrury, according to the IPCC1. combined annual Scope 1 and Scope 2 emissions
In response, a number of jurisdictions made net- (from direct operations and purchased electricity)
zero commitments this year and urgent efforts are – of 7,976 MtCO 2e, an amount greater than the

billion
underway to encourage governments to upgrade
national targets to align with the Paris Agreement.
associated with climate Climate exposures in the supply chain
This year, a record number of companies submitted
risk
disclosures on climate change. CDP supply chain
annual greenhouse gas emissions of the United
States and Canada combined. This climate-related
exposure could have a potential financial impact in
excess of US$906 billion, from phsyical risk such
as extreme weather events or transitional risk
such as reputational or policy related drivers2.

563 Total estimated annual CO 2e Number of initiatives reported as

MtCO2e
savings (MtCO 2e) paying back in three years or less

Energy efficiency: Building fabric 13 122

combined reductions Energy efficiency: Building services 33 1266
reported by suppliers in
emissions Energy efficiency: Processes 202 1492

Fugitive emissions reductions 4 38

US$20.2 Low-carbon energy installation 73 151

billion
Low-carbon energy purchase 46 152

Other 83 433

Process emissions reductions 109 544

reported annual monetary
savings from reductions Grand total 563 4,198

Bank of America engages strategic vendors on As a CDP supply chain member, Nissan engages
climate change through CDP as a supply chain our key suppliers for our vehicle production, with a
member,  and we provide individualized feedback 78% response rate in FY 2018 on the topic of climate
on their performance to both the participating change. We actively monitor suppliers’ response
vendors and their vendor managers. This has rate to the CDP questionnaire and the distribution
facilitated ongoing dialogue between the bank of CDP scores as metrics to measure the success
and vendors which promotes collaboration and of our engagement annually. However, we want our
suppliers to go further on energy efficiency, so we
provides us with the opportunity to recognize
are now promoting our THANKS program (Trusty
environmental leadership among our highest- and Harmonious Alliance Network Kaizen Activity
performing vendors. For us, climate leadership with Suppliers). This is a joint improvement program
includes measuring environmental impacts and that shares experiences from our own plants to help
establishing goals to reduce impacts. We are suppliers to reduce their electricity, gas and other
actively encouraging our suppliers to calculate energy costs and their CO2 emissions. Through this
and disclose greenhouse gas (GHG) emissions program and our engagement with CDP, we hope
and to take concrete steps to establish and meet to see more suppliers undertake actions to reduce
GHG emission reduction targets. emissions year on year.
Beth Wytiaz SVP, Global Environmental Environmental Strategy Group, Sustainability Development
Operations Director at Bank of America Department, Nissan Motor Co., Ltd.

1. IPCC special report on the impacts of global warming of 1.5 °C (2018)

2. CDP analysed the full dataset and they have been normalised by being converted to US$. Anomalous results were removed.
10
11%
Enormous reduction potential
The flip side of these exposures is the great
potential for reducing emissions throughout
Average % of total corporate supply chains. Suppliers reported a
electricity from total of 563 MtCO 2ein emissions savings in 2019.
renewable sources These were achieved through activities such as
improved energy efficiency, the use of low-carbon
the power sector. Currently, 56% of respondents
report details of their energy consumption. These
companies purchased3 an average of 11% of their
electricity from renewable sources. The potential
for reducing emissions globally by engaging with
suppliers to improve this performance is great.
Were all suppliers to the CDP’s 125 supply chain

4%
energy, and the reduction of process emissions. member companies to increase the proportion of the
Importantly, emissions-saving activities were electricity they buy from renewables by 20 percentage
associated with substantial financial savings. points (bringing the average up to 31%), annual global
A total of US$20.2 billion has been reported in emissions would be reduced by a gigaton4.
of suppliers reported having
monetary savings in 2019. This highlights the
a renewable electricity target
increasingly strong business case for companies However, suppliers are not currently demonstrating

92
to take action on climate change. that level of ambition. Just 4% of suppliers (292
companies) report having a renewable energy
However, despite this progress, emissions need to target, while only 92 (1.3% of suppliers) have signed
be falling if the world is to tackle climate change: up to the RE100, a voluntary initative (led by The
number of suppliers who this year, only 29% of suppliers reported absolute Climate Group in partnership with CDP). whose
have signed up to RE100 decreases in emissions. members commit to sourcing 100% renewable
power. This is in stark comparison to their

70%
One approach that can deliver real impact is to customers. This year, 36% (45) of CDP supply chain
encourage suppliers to purchase more renewable members have a renewables target and a quarter
electricity, accelerating the decarbonization of (31) are members of the RE100 commitment.

of CDP supply chain

members are actively
engaging their suppliers Anheuser-Busch InBev has committed that, by 2025, 100% of purchased
on the topic of renewable
electricity electricity will be from renewable sources and has set a science-based
target of a 25% reduction in CO2 emissions across our value chain. We
are actively encouraging our suppliers to follow suit through different
initiatives – and we are starting to see the positive impacts, with a 4.5%
decrease on year one. We engage strategic suppliers on climate change
through CDP supply chain, and this year 44% reported purchasing
renewable electricity, up from 35% last year. This is promising start, but
we want to see more suppliers taking action as this will globally accelerate
the transition into a lower-carbon economy and net zero.
Virginia Covo, Global Director, Sustainability Supply Chain, Anheuser-Busch InBev

How buyers should engage with their supply chains:

Beginner: Ask suppliers what proportion of their electricity comes from renewable sources.
Encourage those starting out to take first steps, such as purchasing renewable electricity for
the first time and setting a target to source at least 20% renewable electricity.

Intermediate: Encourage suppliers to send a powerful signal to the market by committing

to 100% renewable electricity, for instance by signing up to the RE100 initiative. Ask them to
report annually on progress towards this target.

3. The full data set was assessed and responses that were fundamentally incomplete or anomalous were removed. CDP deems data fundamentally incomplete when fields critical to understanding
renewables were not filled out or when data reported was inconsistent throughout the disclosure.
4. Based on the International Energy Agency’s 2017 global grid emissions factor.
11

US$15.8
billion
associated with risks
related to forest com-
modities
72%
of the total financial impact
at risk from deforestation is
associated with reputation and
market trends.
54%
suppliers reported deforestation
is being managed at the board
level (up from 44% in 2018)
27%
of suppliers report having a
commitment to eliminate defor-
estation and/or conversion
71%
of supply chain members
report having a commitment to
eliminate deforestation and/or
conversion
As a white feather broiler [poultry] enterprise with the most complete industry chain in China, Sunner
Group knows that forests are an essential resource for mitigating global carbon emissions. As a new CDP
supply chain member, we will encourage suppliers and work with them to ensure that our supply chain
is protected from forest damage. This will help us facilitate the sustainable development of the circular
economy industry chain and contribute to China’s strategic goal of agricultural modernization.
Shimmer Fu, Chairman of Fujian Sunner Group
5. CNN (2019).
6. PNAS (2017).
12
PROTECTING FORESTS
Focus on forests
Deforestation has risen up the political agenda this
year, with the rate of deforestation in the Amazon
rainforest rising to its highest level in 11 years5. It
has brought additional focus on demand for the
commodities that drive deforestation. Halting
deforestation and allowing restoration and recovery
of forests could deliver up to 30% of the cost-
effective emissions reductions needed by 2030 to
hold global warming below 2 degrees Celsius6.
Drilling down into the supply chain
This year, 14 supply chain members requested
that 536 suppliers provide information on the
production and use of five commodities linked to
deforestation: timber, palm oil, cattle products, soy
and rubber. They received 334 responses.
The extent to which these suppliers are
addressing deforestation risks remains limited.
Only 47% reported undertaking a forests-related
risk assessment, and building internal skills and
capabilities to address these risks.
Despite this limited risk assessment, suppliers
reported total potential financial impacts of at
least US$15.8 billion associated with risks linked
to the production, consumption and trade of forest
commodities.
Financial impact from forest-related risks (US$)
US$3.8 billion
US$474 million
US$11.5 billion
Physical
Regulatory
Reputational and markets
Beyond the food value chain
Addressing deforestation is most effective
when stakeholders work together. A number of
collaborative platforms have been developed,
such as the Accountability Framework initiative
(AFi), which brings 10 leading NGOs together to
provide clear guidance on how to implement no-
deforestation commitments.
Environmental campaigns have successfully
connected forest-risk commodities to food
and packaging value chains. However, these
commodities find their way into many other
sectors on a large scale. For example, the
automotive sector is a major consumer of leather,
timber and rubber, while the chemicals industry
uses considerable volumes of palm oil and soy.
At present, buyers in these sectors rarely engage
their suppliers regarding deforestation.
Cascading commitments and policy
The number of corporate deforestation pledges
increased rapidly in the early 2000s, with over 470
companies announcing commitments, yet there
has been very little progress towards these goals
in the last five years7. CDP supply chain members
have set a high bar for policies and commitments
on deforestation, with 71% committing to eliminate
deforestation and/or conversion from their
operations and supply chains. This leadership is
not, however, cascading down their supply chains:
just 27% of suppliers reported policies to eliminate
deforestation and/or conversion. Similarly, while
86% of CDP supply chain members have set
deforestation-related targets, that figure drops to
37% among their suppliers.
For companies to meet targets to eliminate
deforestation, their suppliers need to match their
level of ambition. CDP provides supply chain
members with analysis and tools to support them
in engaging suppliers more effectively. Thanks
to funding from donors including Norway’s
International Climate and Forest Initiative, CDP
carries out direct regional outreach in Latin America,
China and Indonesia, covering engagement with
suppliers and policy stakeholders.
Cascading forest ambition

120%
100%
100%
86%
80% 71%

60%
46%
37%
40%
27%
20%

0%
Forest related policy Policy with Commitment to eliminate Forest related target
deforestation and/or conversion

CDP Supply Chain Members Suppliers

Deforestation associated with our value chain is a KAO takes deforestation very seriously as it could cause
significant concern for Walmart. As part of Project a reputational risk if not managed correctly. For example,
Gigaton, a Walmart initiative to work with suppliers we use paper pulp in our “Merries” or disposable diapers
to avoid one billion metric tons of emissions which have had a substantial growth in Asian sales to
from our value chain by 2030, we encourage our over 100 billion yen. If a negative campaign was launched
suppliers to set and report upon deforestation against pulp, the corporate and product brand image
goals. This year we were excited to pilot would be damaged, posing a risk of market shrinkage
engagement on deforestation by asking suppliers and reduced sales. To avoid this, as a CDP supply chain
to disclose their forests information through CDP member we engage our paper/pulp suppliers so they
report on their certifications or material traceability to
Supply Chain. We know that no one company can
ensure we are provided with certified materials. KAO
solve climate change or reduce deforestation alone,
aims to implement procurement of only raw materials
and we’re excited to partner with CDP on this topic
that can be traced back to their place of origin by 2020,
to drive action going forward. using the Sustainable Pulp and Paper Procurement
Mikel Hancock, Senior Director, Sustainable Guidelines.
Products, Walmart Inc.
Kao Corporation

How buyers should engage with their supply chains:

Beginner: Buyers should engage suppliers of any goods that contain timber, palm oil, cattle
products, soy or rubber and ask if they have undertaken a forest-risk assessment. It is important
to begin the conversation, as it can take a number of years to develop and deploy a sophisticated
forest risk management strategy. Starting the conversation can prompt suppliers to begin gathering
intelligence on current practices internally, beginning their journey towards zero deforestation.

Intermediate: Zero-deforestation commitments require ambition to cascade down the supply

chain: it is important that suppliers adopt the same level of ambition as their customers.
Buyers should encourage suppliers to set a policy with a time-bound commitment to eliminate
deforestation and/or conversion, and report progress towards that commitment annually.

7. Tropical Forest Alliance 2020 (2018) Progress on Corporate Commitments and their Implementation.
13
 WATER STEWARDSHIP
IN THE SUPPLY CHAIN

1,975
Climate change impacts
The impacts of climate change continue to put our
water supplies at risk. The World Economic Forum
ranks “water crises” as the fourth biggest global
suppliers responded to
risk by impact facing society over the next decade,
member requests for behind weapons of mass destruction, the failure
water disclosure of climate change mitigation and adaptation, and
extreme weather events8.
A call to action to measure, manage and disclose
Companies are asking their suppliers to measure
and report water usage, and to undertake risk
assessments and set public policies. Many buyers
are also asking suppliers to actively manage their
water use through structured targets and goals.
Suppliers also face calls to improve governance
and to ensure board-level oversight of water-

US$78
related risks. We are seeing progress in this regard:
Suppliers under scrutiny This year 60% of suppliers reported board-level
This year, 44 CDP supply chain members asked oversight on water. This is a small increase from

billion
3,746 of their suppliers to provide disclosures 57% last year, and 31% in 2017.
regarding their efforts to manage and govern
freshwater resources, receiving 1,975 responses, Top water security-related risks reported
associated with identified up from 1,709 in 2018.
areas of water risk US$3.5 billion
Suppliers reported US$78 billion at risk from water

60%
security impacts across their operations and value US$18.5 billion
chains. For buyers, this could mean disruption to
delivery of goods and services, increased costs
and reputational damage.
of organisations report
having board-level over- The majority of water risks reported by suppliers
sight on water are physical, related to drought, flooding and
severe weather events. Suppliers reported US$56
billion in potential financial losses related to these
physical risks, and US$18 billion in potential
regulatory risks related to water, such as regulation
of discharge quality and volumes, higher water US$56.2 billion
prices and difficulties in obtaining water permits.
Physical Reputation and Markets
Regulatory

We are working with our suppliers to encourage them to take positive water security action such as reporting
their water consumption information through CDP, ensuring that water risks are governed at the C-suite level
and setting a public policy and target. Furthermore, our intention is to identify possibilities for collaboration with
our suppliers, such as the METRO Water Initiative, which took place for the third time in 2019.
Michael Goebbels, Director Corporate Responsibility, Metro

Water risk in the supply chain is of crucial importance
for the BMW Group, not just from a reputational
point of view, but also from an operational one. Any
disruption in the supply chain presents a challenge for
the BMW Group; water flooding of supplier locations
and, for some technologies, even water scarcity have
the potential to disrupt the production process for
suppliers with severe consequences for our supply of
components. So we engage our suppliers covering
75% of procurement spend through CDP and ask
them to assess their water risks. Key contractually
fixed demands include the existence of a water
policy as we need to know that our suppliers are
taking water security as seriously as we are.
Dr. Andreas Wendt, member of the Board of Management of
BMW AG responsible for Purchasing and Supplier Network
Givaudan’s supply chain faces water security risks.
We are looking for our strategic suppliers to move
beyond reporting water accounting information and
into active management. We take action to reduce
risk by working with suppliers to understand their
water impact, and take action to reduce it. This
includes engaging strategic suppliers on water
security through CDP as a supply chain member.
We measure the success of our engagement in
actions undertaken by suppliers demonstrating
improvement year on year -- for instance,
whether they report a structured target or goal as
well as their CDP score.
Hallvard Bremnes, Global Head of Sustainability, Givaudan

8. World Economic Forum (2019), Global Risks Report 2019 14th Edition
14
 Case study -- Collaborating across The result was positive. On average, the number of suppliers
meeting each criteria rose by 6 percentage points in comparison
the automotive value chain with the previous year, despite an increase in the total number of
suppliers participating:

72% 53%
Over the last two years, nine major global car and car parts
reported reported
manufacturers have worked together to agree on a set of key water conducting
water stewardship criteria on which to engage their suppliers. withdrawal a full wa-
information (up from 71% ter-risk assessment cover-
The purchasing companies – all CDP supply chain members – in 2018) ing their direct operations
(up from 47% in 2018)
were BMW AG, Ford Motor Company, General Motors Company,

75% 54%
Honda Motor Co., Ltd., Jaguar Land Rover Ltd, Mitsubishi Motors reported reported
Corporation, Nissan Motor Co., Ltd., Toyota Motor Corporation, setting wa- having a
and Volkswagen AG. ter targets document-
or goals (up from 70% in ed water policy (up from
2018) 49% 2018)
They wanted to send a unified message to suppliers in the
industry that, if they wish to sell to any of these buyers, they will
Suppliers reported conducting water risk assessments 2017-2019
be asked to meet common water stewardship criteria, namely:
450
{ Report water accounting information; 400
69%
59%
{ Undertake a water risk assessment; 350
300 45%
{ Set a water target or goal; and 250

{ Set a public water policy. 200 392

150 300
100 225
To promote this collaboration, the group provided written 50
guidance to suppliers and hosted joint webinars. 0
2017 2018 2019
Number of suppliers % of responded suppliers

Water security in the supply chain presents a strategic risk to Juniper Networks. As part of Juniper’s business
continuity planning, we have asked suppliers that present a potential impact on Juniper’s ability to deliver products to
customers to report on water-related issues through the CDP supply chain water questionnaire. Disclosing through
CDP is important to us as, it helps us to understand where suppliers are on their water journey. We assess their overall
performance using CDP’s score and whether they set a public policy or target related to water. Progress on the
topic is discussed with them during business reviews and on their scorecards, bringing water into business
conversations rather than as an add on. Our suppliers recognize this as an opportunity to collaborate with us to
manage risks and create productive, long-term relationships and explore potential efficiencies and cost savings.
Jolene Iyer, Sr. Manager, Sustainability and EHS at Juniper Networks

How buyers should engage with their supply chains:

Beginner: Buyers should begin engaging suppliers on key starter metrics, such as measuring
and monitoring water withdrawal, consumption and discharge, and request that they conduct
a water risk assessment.

Intermediate: Building on these risk assessments, buyers should further engage those
suppliers who report they face water security risks in their own operations or supply chains. To
mitigate these risks, suppliers should integrate water-related issues into long-term business
objectives, set timebound commitments, and publish robust public policies.

15
 REGIONAL OVERVIEW

North South
Global  Asia Oceania Europe  Africa  
America  America

Climate 

# of respondents  6892 2424 610 2067 47 1726 47

% reporting scope 1  68 62 51 76 60 73 55

Total scope 1 emissions (tCO2e), in millions 4,346  1,308  166  1,324  5,922  1,475  66,068 

% reporting scope 2  52 47 32 62 49 61 38

Total scope 2 (market-based; tCO 2e), in

362,401  32,285  176  327,520  7  2,390  21 
millions 

% reporting upstream scope 3  18 13 10 19 15 25 19

Total upstream scope 3 (tCO2e), in millions  11,158  7,278  44  721  29  3,075  9 

% with emission targets  46 31 21 66 43 52 36

# with reduced emissions  1975 552 106 685 15 601 14

# with science-based targets  306/590 58/153 5|15 140/274 1|5 102/141 0/1

% engaging upstream suppliers  36 32 29 30 47 51 19

Water 

# of respondents  1994 610 256 640 11 455 22

reported water withdrawal volume  1252 370 122 440 7 297 16

# with water risk assessment  1171 324 109 402 7 314 15

# with water targets  1371 394 157 467 5 335 13

# with public policy on water  914 234 67 372 3 231 7

% engaging upstream suppliers  17 18 7 18 9 22 9

Forests 

# of respondents  334 121 102 48 4 58 1

# with forests risk assessment  158 52 35 28 4 38 1

# with traceability  184 69 38 26 4 26 1

# with targets  111 41 13 21 2 33 1

# with deforestation policy  155 53 33 27 3 38 1

16
ACKNOWLEDGEMENTS

CDP would like to thank the members and responding companies
consulted during the preparation of this report. We would also like to
thank Lucas Joppa for his foreword.
We are grateful to receive funding for CDP’s Power of Procurement
project from Norway’s International Climate and Forest Initiative.
Our appreciation goes to our Brazilian scoring partners Gestão Origami,
and our Japanese scoring partners. And we remain indebted to our
global scoring partner, ADEC Innovations, for its help and support.
Thanks also go to the contributions from the CDP Supply Chain,
Climate, Forests, Water Security and Communications team, with
special mention to Hannah Doughty, Hugo Ernst-Jones, Imogen Terry,
Leo Berthon, Matthew Sumners, Talia Rudee, Tegan Tallulah, Viera
Ukropcova, Tom Coleman and Christina Copeland.
Sonya Bhonsle
Global Head of Supply Chain, CDP

We are grateful to receive funding for CDP’s CDP scoring partner

Power of Procurement project from:

CDP supply chain premium and lead members 2019

* Alphabet, Inc. and The LEGO Group are also CDP supply chain lead members

17
 DISCLOSURE INSIGHT ACTION

CDP Contacts UK & Europe Hong Kong & Southeast Asia CDP Headquarters

Paul Dickinson Rea Lowe Pratima Divgi 4th Floor Plantation Place
Executive Chairman South
Matthew Sumners 60 Great Tower Street
Paul Simpson Hannah Doughty India London EC3R 5AD
Chief Executive Officer Tel: +44 (0) 20 3818 3900
Kate Redington Damandeep Singh

Sue Howells Hugo Ernest-Jones

Chief Operating Officer
Dexter Galvin
Global Director,
Corporations & Supply Chains
CDP North America
Soline Bonnel CDP Board of Trustees
127 West 26th Street
Linda Kannenberg Chairman: Alan Brown New York, NY 10033
Tel: +1 (212) 378 2086
Annise Parker

North America Jane Ambachtsheer

Sonya Bhonsle www.cdp.net
Global Head of Supply Chain George Hodge Stephen T. Chow
info@cdp.net
Andrew Cummings Jeremy Burke

Julia Silberman Justin Johnson

© CDP 2019
Talia Rudee Katherine Garrett-Cox
This report and all of the public
Pilar Bennett Rachel Kyte responses from corporations
are available for download from
Christine Loh www.cdp.net
Latin America Ramakrishnan Mukundan

Lauro Marins Jeremy Smith

Rebeca Peres de Lima Takejiro Sueyoshi

Lucas Ribeiro Martin Wise

Caio Monaco

Japan

Ken Yamaguchi

China

Wanyu Sung